* Cites rising capital costs after Fukushima, Sept. 11
* Cheaper power prices due to natgas a factor
* Vermont governor applauds plant closure
By Eileen O'Grady and Scott Malone
HOUSTON/BOSTON, Aug 27 Entergy Corp will
shut the Vermont Yankee nuclear power plant, citing high costs
tied to regulation and competition from cheap natural gas,
bringing to an end a long battle with politicians and
environmentalists seeking to close it.
Vermont Governor Peter Shumlin welcomed the news that the
40-year-old plant, which generates three-quarters of the state's
power, will cease operations by the end of 2014, though the
closure raises new problems for the New England state, including
how long it would take to clean up the site.
Entergy's move came just two weeks after a federal appeals
court largely sided with the company in its fight to prevent
Vermont from shutting down the only nuclear power plant in the
state and one of four in New England.
Opposition to the Vernon, Vermont, plant has grown over the
years, most recently focusing on a January 2010 disclosure of a
leak of radioactive tritium. Still, the U.S. Nuclear Regulatory
Commission granted the plant a 20-year operating license in 2011
that would have kept it running until March 2032.
But Leo Denault, Entergy's chief executive since February,
said in an interview with Reuters that the plant was no longer
economically viable due to a combination of rising capital costs
after the Sept. 11 attacks, Japan's 2011 Fukushima disaster and
low wholesale electricity prices stemming from cheap natural gas
burned by competing plants.
"We did everything we could to keep the plant open," he
said, praising the 600 employees for operating the plant even
when "they did not feel welcome in the state."
Opponents of the plant were quick to voice their approval.
"This is not a big surprise to me and I don't think it's a
big surprise to many who follow the economics of aging nuclear
power plants," Shumlin, Vermont's Democratic Governor who led
the state's fight to have the plant shut down when its initial
operating permit expired in 2012, told reporters.
Marvin Fertel, chief executive of the Nuclear Energy
Institute said in a statement that the shut down was "a great
loss to the state of Vermont, the regional economy and
consumers, and the environment."
The Fukushima meltdowns and radioactive contamination led
regulators to review safety standards, which could lead to
requirements for costly plant improvements, a decade after 9/11
prompted heavy spending to tighten security around plants.
Surging output of shale gas, which sent natural gas prices
to 10-year lows in 2012, has also weighed on the nuclear
industry. Last October, Dominion Resources Inc's Kewaunee
plant in Wisconsin became the first nuclear plant to be closed
due to cheap gas prices after hundreds of coal-fired plants had
Natural gas-fired plants now account for more than half New
England's energy supply, according to the region's grid
With Vermont Yankee, a total of five U.S. nuclear plants
have shut or will shut before their licenses expire.
Denault said Entergy is open to a settlement with New York
State officials over the future of its controversial Indian
Point nuclear plant, which is near New York City.
Vermont Public Interest Research Group, a local advocacy
group which has been lobbying for Yankee's closure since the
1970s, said it felt vindicated by Entergy's decision.
"It represented a risk would could not afford for power we
don't need," VPIRG Executive Director Paul Burns said in a
Vermont's total energy consumption is the lowest in the
country, according to the U.S. Energy Information
Administration. In 2011, three-quarters of its power generation
came from nuclear power, with another 21 percent from
Closure of the plant will probably not have a large impact
on natural gas markets, Thomson Reuters analyst Reza Haidari
said, estimating it would boost U.S. natural gas consumption by
less than 0.01 percent.
Entergy said it will take an after-tax impairment charge of
about $181 million in the third quarter due to the retirement of
the plant, the smallest that it owns, and expects further
charges of $55 million to $60 million related to future
severance and other costs through the end of next year.
The New Orleans-based company said the shutdown would
modestly benefit its operational earnings, excluding special
items, within two years, with cash flow expected to increase
about $150 million to $200 million through 2017.
Shares of the U.S. power company were little changed, down
26 cents to $62.81 per share on the New York Stock Exchange.
LONG CLEANUP AHEAD
Entergy's decision to close the plant leaves Vermont with
the question of what to do with the site, located in the rural
state's southeast corner, near New Hampshire and Massachusetts.
It could be some time before the site is available for other
uses, warned energy specialist Christopher Russo of Charles
River Associates in Boston.
"It's probably on the order of 50 years before it goes back
to being a green field site," Russo said. "There's nowhere to
move the nuclear fuel at this point."
That said, he noted, one of the greatest assets in a
decommissioned nuclear power plant is its connection to the
electrical grid, which could make the site attractive to a
utility looking to install another style of generator.
"The grids were almost built around these plants," Russo
While Vermont officials have long fought to close the plant,
area residents had an uneasy peace with it.
Fana Cyr, a 37-year-old builder from Hinsdale, New
Hampshire, across the Connecticut River from the plant, said he
was glad it was being shut down.
"I figure it will be safer, I've heard they had some
problems with it," Cyr said. "Hopefully they clean up the mess."
Cyr discussed the plant as he fished in the waters of the
same river that plays a role in the plant's cooling systems.
"We do fish here," he said. "I don't do much swimming here.
And we definitely don't eat the fish."